World Bank, Partners Argue in Favor of Digital Gov’t Payouts

The World Bank Group and its partners at CGAP have introduced a guideline that outlines best practices for the enhancement of government-to-person (G2P) payments. 

The World Bank Group and its partners at CGAP have introduced a guideline that outlines best practices for the enhancement of government-to-person (G2P) payments. 

These payments include social assistance payments, social insurance benefits, and public sector wages, among others. There are a variety of target recipients and many of these payments reach population groups such as social assistance beneficiaries, subsidy recipients, teachers, and health frontline workers, among others. Many of these groups are more likely to be marginalized, financially excluded, and disempowered. Thus, digitizing these payments represents an important opportunity to advance development outcomes. 

A study conducted on 46 developing countries found that, on average, governments were spending 1.5% of their GDP on social assistance payments, 3.6% on pensions, and 7.3% on public wages. 

The partners agree that digitizing G2P payments is essential to advancing the cause of financial inclusion. The use of digital methods has the potential to simplify the lives of recipients, stimulate growth in the financial sector, and encourage savings.

Potential benefits include:

Improved recipient welfare: Digitization can make receiving payments more convenient for recipients. 

Encouraging government-wide fiscal savings: Digitizing payments that leverage shared infrastructure can bolster efficiency, reduce government costs, and prevent potential leakages and losses. 

Spurring innovation and private sector development: The recurring nature of G2P payments can represent an opportunity for payment service providers, who can tailor products to fit the needs of recipients. Digitization could spur competition in the private sector, lowering costs and boosting coverage. 

Though experts are confident that modernizing G2P can garner positive results for recipients, governments, and the private sector alike, there is not yet a single, uniform path that governments can follow to make the most of digitization. There are different factors to consider in efforts to digitize G2P payments.

The study includes major building blocks to be considered 


This includes ID systems, national payment systems, database systems, and overall connectivity. Poor network and digital payment infrastructure will negate the potential benefits of digitization.

Product and market design 

G2P payment recipients are often diverse – some may enjoy fair access to financial services while others do not. Recipients could also differ in their preference for mobile money accounts instead of conventional banking and in other ways that could determine how they see and use digitized G2P systems. It is important for the programs and agencies in charge of G2P payments to account for the diverse recipient circumstances, even though preferences may differ from what program designers expect.

The World Bank’s guideline also touches on a few more points involving digitized G2P payments. These include:

Inclusion and empowerment 

            Communication and Literacy 

Delivering G2P payments into an account is not sufficient. Thus, communication and awareness initiatives are needed which will also help to meet Long-term goals, including financial inclusion and women’s economic empowerment.

            Data Protection and Cybersecurity 

To facilitate the delivery of G2P payments, it is crucial to implement data protection mechanisms and cybersecurity as recipient information is kept and exchanged across many databases, systems, and devices.

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